Don’t Disrupt the Balance of a Balanced Scorecard

Nov 08, 2010

At OnStrategy, we love the Balanced Scorecard because it is a strategic planning tool that provides a holistic strategy framework (among other things). However, one issue I often encounter is executives wanting to disrupt  up the “balance” by evaluating everything from a financial perspective. Here is why you should avoid this error: every goal and action in a for-profit strategic plan should either drive top line revenue or improve bottom line profitability – but you can’t stop there. A balanced strategy needs to articulate how these financial outcomes will be achieved from customer, internal process and people perspectives.

If you fall into the trap of pushing everything into the financial perspective and force corporate, high-level goals to interfere with customer retention, operational excellence and human resource management, you end up losing the power of your plan. Additionally, you cannot easily operationalize the plan. If you find yourself fighting this battle, take out the a standard strategy map and diagram how your goals and objectives are inter-related. This will allow you to visualize your corporate goals in a way that is holistic and balanced. If you don’t see a holistic picture, then go back to your diagram and look for the missing section of your strategy.

Check out our videos and our resource section on the Balanced Scorecard for more information.

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